Schwab Tops Q3 Expectations on Record Revenues, Favorable Backdrop

Charles Schwab SCHW posted record net revenues of $6.14 billion for the third quarter of 2025. The metric was up 27% year over year, with strength across all major revenue streams. The top line also beat the Zacks Consensus Estimate of $5.95 billion.

Supported by massive revenues and manageable expenses, SCHW’s adjusted earnings per share soared 70% from the prior-year quarter to $1.31. Further, it surpassed the consensus estimate of $1.23.

Core Drivers of Schwab’s Q3 Revenue Growth

Record net new assets: Schwab attracted $137.5 billion in core net new assets during the quarter, marking a 44% year-over-year jump. This surge was driven by organic client growth and sustained transfers from competitors. This lifted the total client assets to an all-time high of $11.59 trillion.

Trading activity spike: Daily average trading volumes surged 30% from the prior-year quarter to 7.42 million trades, fueling a 25% increase in trading revenues as clients responded to market volatility and opportunity. Schwab opened more than 1 million new brokerage accounts for the fourth consecutive quarter, highlighting persistent client engagement. Driven by these factors, the company’s trading revenues jumped 25% to $995 million.

Higher net interest revenues (NIR): A favorable interest rate environment continued to benefit Schwab, with net interest margin rising 78 basis points year over year to 2.86%. Client sweep cash balances grew $13.5 billion, supporting both profitability and funding costs. 

The company also lowered its supplemental bank funding by $12.9 billion to $14.8 billion as of Sept. 30, 2025. This reflected better balance sheet efficiency. At the end of the third quarter, Schwab’s average interest-earning assets were relatively stable at $419.8 billion. Hence, NIR (SCHW’s biggest revenue source) increased 37% year over year to $3.05 billion. 

Asset management fee growth: Revenues from asset management and administration rose 13% to $1.67 billion, supported by record adoption of wealth solutions and strong equity market performance. At the end of September, client assets receiving ongoing advisory services totaled $5.81 billion, up 16% year over year.

Other Factors: Strong equity markets, client optimism and robust economic activity supported both asset growth and trading engagement at SCHW. Further, the company expanded its AI-enabled investment solutions and ETFs, driving higher net flows and retention among higher-value clients.

Other Factors That Influenced Schwab’s Q3 Earnings

Total non-interest expenses (GAAP basis) rose 4% to $3.11 billion. Excluding non-recurring items, adjusted total expenses were $3 billion, up 5% year over year. 

Additionally, as of Sept. 30, 2025, the company had 38 million active brokerage accounts, 2.2 million banking accounts and 5.6 million corporate retirement plan participants.

Despite a record quarterly performance, Schwab’s shares pared initial gains and ended yesterday’s session down almost 1%. Bearish investor sentiments had nothing to do with the company’s financial performance; it was because of the sector-wide concerns about regional banks and increasing credit stress.

At present, Schwab carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

Earnings Dates & Expectations of Schwab's Peers

Here are a couple of Schwab’s peers that are yet to come out with quarterly numbers.

Tradeweb Markets TW is scheduled to announce quarterly numbers on Oct. 30.

In the past week, the Zacks Consensus Estimate for TW’s quarterly earnings has been revised 2.4% lower to 83 cents, indicating a 10.7% rise from the prior-year reported number.

Robinhood Markets HOOD is slated to announce third-quarter 2025 numbers on Nov. 5.

In the past seven days, the Zacks Consensus Estimate for Robinhood’s quarterly earnings has moved 4.3% upward to 49 cents, implying a 188.2% jump from the prior-year reported number.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research